Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: StanX Long who wrote (55321)	11/10/2001 2:45:19 AM
From: StanX Long	Read Replies (1) \| Respond to of 70976

WIRE: 11/09/2001 8:46 pm ET Huge WTC Claims Hurts Berkshire Hathaway abcnews.go.com By Bill Rigby NEW YORK (Reuters) - Warren Buffett warned that the upsurge in insurance premiums after Sept. 11 will not last as long as expected, and that a recession is already biting at profits, as his Berkshire Hathaway Inc. <BRKa.N> reported a large third-quarter net loss, dragged down by massive claims from the destruction of the World Trade Center. Berkshire, which set aside $2.275 billion for the Sept. 11 attack, reported a net loss of $679 million, or $445 per share in the quarter, including realized investment gains. That compared with a profit of $797 million, or $523 per share, in the year-ago quarter.

To: StanX Long who wrote (55321)	11/10/2001 9:41:19 AM
From: Gottfried	Read Replies (1) \| Respond to of 70976

Stan, BRK: Warren gave an unusual quarterly comment and freely admitted his mistakes. Excerpts... Buffett normally writes to shareholders once a year, but said that this year's third quarter results are "anything but normal." The estimated insurance charge for the Sept. 11 attacks remains a guess, Buffett wrote, adding that no one in the industry can be reasonably precise now as to final losses. In the letter, Buffett blamed himself for not pricing insurance to plan for managing manmade mega-catastrophies. "In effect, we, and the rest of the industry, included coverage for terrorist acts in policies covering other risks, and received no additional premium for doing so," he wrote. "At Berkshire, we will never knowingly write policies containing promises we can't keep. If we have been paid appropriately for that risk, we don't mind losing $20 billion. But we don't want to lose $20 billion, even though we could handle that." The company is revamping its underwriting practices to make sure it focuses on three basic rules to running an insurance company, Buffett wrote. -- Only accept risks that you are able to properly evaluate. -- Limit the business accepted in a manner that guarantees you will suffer no aggregation of losses from a single event or from related events that will threaten your solvency. -- Avoid business involving moral risk: No matter what the rate, you can't write good contracts with bad people. All of those rules were broken during the past three years at General Re, Buffet said, but the consequences are not lethal to the business. The losses are punishing to current earnings, but the company remains as strong as any insurer in the world, he said. Berkshire's other insurance businesses, like GEICO, did well during the third quarter, Buffett said. Retail, manufacturing and service business are experiencing the effects of the recession that Buffett said started many months ago, he wrote. The company's Dexter shoe manufacturing has ended production in the U.S. and Puerto Rico because of wage advantages enjoyed by competitors. Buffett wrote that his delay in closing that operation cost shareholders considerable money. Dexter's business will continue under the management of H.H. Brown, but Dexter lost $31 million in the third quarter. The company will continue to look for companies to acquire, he said.[snip] G.